EIOPA's Project on the Review of the Solvency Capital Requirement Standard Formula Under Solvency II
EIOPA supports a sound process of post-evaluation of the new insurance supervisory regime. One of EIOPA's key objectives is to ensure a rigorous, evidence-based and transparent review of Solvency II.
As part of this process, EIOPA has launched the project dedicated to the review of the Solvency Capital Requirement (SCR) standard formula. This project will address the three priorities of the two calls for technical advice from the European Commission:
- First, on simplifications and proportionate application of the SCR requirements.
- Second, on removal of technical inconsistencies, i.e. recalibration of certain risks and other technical issues; and
- Third, on removal of unjustified constraints to financing.
The timeline reflects the reliance on the use of data arising from annual reporting. A first set of advice for which no annual reporting data is required contains the following items: simplified calculations, look-through approach for investment related vehicles, reducing reliance on external credit ratings, treatment of guarantees and exposures to regional governments and local authorities, risk-mitigation techniques, undertaking specific parameters and information on loss-absorbing capacity of deferred taxes. The second set includes advice for which annual reporting data is needed and includes all other items arising from the calls for technical advice: risk margin, simplifying the look-through approach, policy options on loss-absorbing capacity of deferred taxes, premium and reserve risks, catastrophe risks, mortality and longevity risks, counterparty default risk, currency risk at group level, interest rate risk, own funds, unrated bonds and loans, unlisted equity and strategic participations.
- To ensure a proportionate and technically consistent supervisory regime for (re)insurance undertakings;
- To look for possible simplifications in the SCR standard formula and to ensure the proportionate application of the requirements.
EIOPA will suggest changes in methods, assumptions and standard parameters as well as additional policy options. During this process, EIOPA will be engaging in a constructive dialogue with stakeholders on an on-going basis.
End of 2016 until beginning of 2017
Call for information not collected via the reporting templates
Public consultation of a draft discussion paper on the first call for technical advice
Call for Evidence to stakeholders on the second call for technical advice: Debt without a rating by an External Credit Assessment Institution (ECAI) and unlisted equities
- July 2017 until February 2018
Analysing annual reporting data only available as of July 2017
Consulting relevant stakeholders
Drafting of the final technical advice
Public consultation on a draft technical advice for the items in the first set of advice
Providing technical advice for the items in the first set of advice subject that these elements can be amended in EIOPA's final technical advice to be delivered end of February 2018.
- November to December 2017
Public consultation on a draft technical advice for the items in the second set of advice
- At the latest on 28 February 2018
EIOPA's final technical advice to the European Commission